btc, bitcoin

Bitcoin: Do You Have The Patience For A Conflicted Market?

The area between 58K and 62K is a proportional reversal zone which has demonstrated its ability to hold price back previously. If price is going to fake out again, it is most likely to do so within this zone. So is it worth taking the chance that it breaks out? A rational answer can come from evaluating the risk.

Assuming you buy for a swing trade upon the break out at 61K, and the next daily candle closes red, you are likely caught in a fake out. The next support is between 53 and 50K. If you choose to give the broader trend a chance to follow through, you are looking at 8K+ points of risk. This means in order to justify such a trade, Bitcoin needs to push 68K just to reach a reward/risk ration of 1:1. While anything is possible, that is a lot of risk to take for a market that has to make a huge effort. All while facing a high probabily bearish reversal zone.

Some may wonder: why does the stop have to be so far away? Placing stop orders effectively requires respecting market proportions. Placing a stop order at a level you “feel” is appropriate for your risk tolerance is not relavant to the market. Bitcoin doesn’t care about how much you want to risk. This is why many traders get stopped out prematurely. The 50 to 53K area support is proportional to the time frame that we utilize for our strategy.

The best thing to do in this situation: nothing. When there is no attractive level, no setup, no confirmation, then why assume any risk? I repeat this often: we trade rules. It is the rules that produce results, not our thoughts, feelings or opinions. Waiting this out means waiting for the 50K support area to be tested again, OR price breaks out and then presents a momentum continuation pattern near the 58K area AFTER breaking out first.

If you are driven by fear of missing out, that usually means you do not have a clearly defined set of rules. If you would like to know more about how our swing trade strategy works, visit.